The False Dichotomy Between Economy and Society: Implications for a Global Green Economy

6 Mar 2012

This is part of a series of think pieces reflecting on the importance of bringing the social dimension back into discussions about green economy and sustainable development.

One of the assumptions about green economy is that it will lead to poverty reduction and equity. Since several mainstream arguments for going green are largely economic, the structural changes and incentives envisaged are also largely economic in nature. However, to "go green with equity" will require social sustainability principles such as (i) preferential access for the poor and vulnerable to new jobs, green microfinance and infrastructure; (ii) adaptable social protection mechanisms which mitigate the impact of environmental and disaster risk and provide income support for green consumption by the poor; and (iii) a rights-based approach which tackles fundamental structural inequalities.

Leisa Perch is Team Leader and Policy Specialist for Rural and Sustainable Development at the International Policy Centre for Inclusive Growth in Brazil, a partnership between the government of Brazil and the United Nations Development Programme, focused on South-South learning, cooperation and knowledge sharing on applied policy research for inclusive growth. She is a co-editor of recently published Poverty-in-Focus magazine on “Growth, Gender, Poverty and Environment – Dimensions of Inclusive Development”. IPC Poverty in Focus #23.

Much of the impetus behind the green economy rests on the idea that growth, sustainability and equity are compatible, that poverty eradication and environmental sustainability are reconcilable, and that “green” can be economically, socially and environmentally sustainable. Yet significant levels of deprivation, the current rate and cost of environmental damage,1 the escalating cost of climate variability and change, and the persistent lack of access to resources by billions of people suggest that we have neither achieved the necessary balance for sustainability, nor been able to maintain many efforts which seemed full of promise in the 1970s, 1980s and 1990s. Large numbers of people across the planet still do not enjoy the individual freedoms expressed in the Universal Declaration of Human Rights, including the “right to a standard of living adequate for health and well-being…” (Article 25 [1]). The virtuous cycle between growth, income and equity has not yet been realized.

To some extent, this same cycle is perpetuated in the current green economy formula. It embodies a number of assumptions: (i) that economic growth can be successfully and sustainably decoupled from environmental degradation; (ii) that economic incentives and structures can be both effective and efficient in facilitating this decoupling in order to turn the tide in a “green direction”; and (iii) that such changes can deliver both poverty reduction and equity. Social inclusion appears more as a virtue than a central strategy and principle. Below I outline key issues for the growth-equity dimension of green economy, and the related implications for sustaining a global green economy. Green, thus, has a distinctly socio-political dimension.

Defining Green
Many mainstream arguments for going green are largely economic and, as a result, the structural changes and incentives envisaged are also largely economic in nature. The push factor of the climate crisis and the pull factor of new economic productivity and jobs are significant incentives of a green economy, but they are also shaped by the need to avoid a full-on crisis. While these are powerful incentives at a macroscale, they fall short of addressing the larger objective of equitable, sustainable human development. Strategies speak more about productive sectors than of the people who work in – or depend on – them, people who need to benefit from going green and who need support in order to go green.

The 800 million people who live in least developed countries (LDCs), many of whom are African, need more than economic growth. While the African Economic Outlook (2011) highlights the consistency of growth in Africa at the macro level during the last decade, and the relatively smooth rebound from the global economic crisis, a startling fact remains: 80 per cent of African countries face a food deficit, and constitute 55 per cent of all such countries in 2010. Food insecurity, which limits and potentially destabilizes growth, is a manifestation of broader problems of human insecurity and inequality.

These problems are increasingly acknowledged as a source of social unrest and political instability, and a threat to development, growth and governance.2 The 2011 World Development Report draws attention to the fact that civil conflicts, on average, cost developing countries roughly 30 years of GDP growth, and countries in protracted crisis can fall behind by over 20 percentage points in overcoming poverty. Post-conflict states—35 in 2008—are largely resource-rich and governance-poor. Some of the poorest fragile states, now a collective called the G7+, have asked that aid be focused on conflict and security, that is, on addressing their countries’ fragility. The allocation and reallocation of resources to support green growth strategies will involve the accommodation of multiple needs and interests, requiring strong governance mechanisms, particularly for effective participation.

Financing Green in the Context of Inclusive and Sustainable Development
Many critiques of the limited integration of social issues in environmental efforts and strategies, including the Clean Development Mechanism (CDM), show that trade-offs between one environmental goal and another, and between environmental conservation and social inclusion, can occur quite easily.5 Neither the availability of significant resources nor lofty objectives have resulted in significant social benefits. In the case of the CDM, a focus on reducing the maximum carbon emissions as soon as possible often seems to outweigh social considerations. To paraphrase the title of a recent article in Nature by Andy White, "cash alone will not slow [forest] carbon emissions".

Increasing focus on economic drivers for an industrial and energy-based "green" transformation potentially exacerbate such tensions. Scaled-up investments in hydropower, for example, can provide a number of public goods but is also likely to increasingly concentrate water resources away from rural areas and from agricultural production. Greater availability of energy in itself will not necessarily benefit the poor or the socially and economically excluded. The 1998 Human Development Report6 highlights this contradiction between availability and access at a global level, noting that

the richest fifth consumed 58 per cent of the world’s total energy, the poorest fifth less than 4 per cent; and

the richest fifth owned 87 per cent of the world’s vehicle fleet, the poorest fifth less than 1 per cent.

More recent evidence from the World Bank (see chart below) suggested that global disparities in consumption—and by implication access—persist.

Such disparities are often spatial, with stark contrasts in urban/rural access to water, sanitation and electricity, despite growth and rapid diffusion of technology. The traditional development model has tended to favour urban-led growth and current strategies for a green economy do not, as a whole, represent a fundamental change in that pattern. Of the 10 key productive areas7 targeted for the green economy (UNEP 2011), only four weigh heavily towards rural-centred growth: agriculture, water, forestry and fisheries, which would theoretically provide more direct opportunities for the more than one billion rural poor. A large proportion of the world’s rural poor are in Africa and Asia, including numerous forest-dependent communities. While the economic arguments are clear, it is not a given that the reduction of forest emissions, for example, which is likely to fuel and expand the carbon market which in turn may finance other green transformations, will also deliver a better quality of life and livelihood opportunities for these communities.

The current market-oriented focus of green capital and investment has tended to favour economies of scale—or, large production units—as well as bigger economies, bigger populations and concentrated impacts, often leaving equity concerns to be resolved by other public policy mechanisms. The focus on scale has largely benefited G20 countries, including the emerging economies of the South. The equity agenda of the green economy is further weakened by the following: (i) increasing levels of investment in renewable currently outstrip ODA (in 2009 the latter was USD 162 billion in comparison to USD 119.6 billion of the latter);8 and (ii) the growth of the biofuel sector, into global multibillion dollar engine stands in stark contrast to the steadily declining scale of investment in agriculture over the past three decades.

When policies, strategies and interventions ignore unequal access to finance, land and other resources, they potentially engender negative knock-on effects, resulting in a further entrenchment of inequality, which can in turn reinforce unsustainable patterns of resource use and consumption. The tensions between access to food, water and energy as rights, and their consumption, as a foundation for development and economic opportunity, needs urgent and more careful consideration.

Going Green and Staying Green
A green economy strategy relies on change in both consumption and production, with employment as an important linchpin. The poor make up a significant and strategic share of consumers: to be green growth actors they need employment that provides a steady income and allows them to make long-term investments, such as energy savings. Structural dynamics in the macro and micro-economy present clear challenges to the social sustainability of a green economy:

The construction sector—which is a key national and global employer as well as a driver of growth—has significant green potential from an environmental viewpoint, but often delivers limited opportunities for some key vulnerable groups, particularly women. Moreover, construction jobs are often seasonal or temporary, and are no panacea for the income volatility which often undermines the sustained graduation of households out of poverty.

The fact that the poor spend a significant percentage of their income on food is an important consideration for a green economy that also aims to reduce poverty. The link between agriculture, health and nutrition receives much less attention than it should. Food insecurity costs—both in productivity (decreases) and in public investment (increases), and chronic health care costs, many of which are nutrition-related—now burden both developing and advanced economies.

The economic cost of poor sanitation is estimated to be more than 5 per cent of GDP in many developing countries, and is around the same level of GDP that is often recommended as a minimum investment in both education and health.

Many people face income poverty, food insecurity, malnutrition, discrimination and human insecurity at the same time. UNDP’s 2010 Human Development Report was anchored on an effort to improve understanding of and improve the data on multiple deprivations and their impact on poverty and inequality. Debated as it is, the Multidimensional Poverty Index (MPI) is still one of the few tools that advances understanding of the multiple deprivations that simultaneously affect the lives of the poor. Many who are targeted by poverty reduction activities extend across the major groups: they are female, young, indigenous, disabled and displaced.

Focused attention is therefore needed on the effective incentives for green and affordable consumption, as a complement to ongoing research and practice which tends to favour “greening” production and investment. Green economy strategies must respond to the multiple deprivations which condition poverty and inequality. Otherwise, multiple challenges at the nation state, household and individual levels are likely to put the “staying power” of the green economy to the test.

Getting the Politics and the Policy Right
The constant flux of the economy, society and environment, not least due to their influence upon each other, suggests that there is no inherent "ideal state" for the green economy. The fundamental and sustained changes required at the household, national and international levels will rely significantly on the socio-political: collective action, political savvy, ethical consumerism and production, and social accountability and responsibility. Moreover, these will rely as much on the ease of access, relevance and cost-effectiveness of new green technologies—which are equally a matter of equity, justice and balance—as on finance and economics. Ensuring the positive triggers needed for a green economy to deliver “for and with society” means defining a pathway that delivers sustainable outcomes through which the imperatives for growth and the financing of development can both be met.

To borrow from Robert Verchick (2010) Go Green, Be Fair, and Keep Safe: this “quality of growth” paradigm shift—"going green with equity" (the underlying promise of the green economy), will require social sustainability principles such as (i) preferential access for the poor and vulnerable to new jobs, green microfinance and green infrastructure; (ii) adaptable social protection mechanisms which mitigate the impact of environmental and disaster risk and also provide income support for green consumption by the poor; and (iii) a rights-based approach which tackles fundamental structural inequalities such as land rights and tenure for women in Africa and Asia.

Moreover, it calls for a new "mutualism"9 between state, society, the private sector and individuals, as well as a new commitment and investment in multi-focus actions which move us away from the traditional politics of market versus state and economic versus social. The recent dialogue hosted by the Republic of the Maldives and others on ‘Economics, Environment and Security’ marked a step in this direction. The question of how such an approach can be facilitated through global-level action remains largely unanswered. This is a key challenge for Rio + 20 and the revamped sustainable development agenda.